- They noted that Kenya's agricultural sector is a vital component of the nation's economy and contributes significantly to the GDP
- They said that impositing the levy threatens to reverse the gains made in promoting agricultural exports
Image: FILE
Stakeholders have raised concern over the recent decision by the Agriculture and Food Authority (AFA) to impose a 0.3per cent levy on the export of cereals, legumes, and roots and tubers.
The Kenya National Chamber of Commerce and Industry (KNCCI) and the Cereal Growers Association (CGA) on Thursday said the move will have a negative impact on the country's export sector.
They noted that Kenya's agricultural sector is a vital component of the nation's economy and contributes significantly to the GDP as well as serves as the second-highest wage employer in the private sector.
"The agriculture sector is a cornerstone of Kenya's economy, accounting for 21.8 per cent of GDP and the second highest wage employer in the private sector," they said in a statement.
They said that impositing the levy threatens to reverse the gains made in promoting agricultural exports hence making the country's produce less competitive in the international market.
"This levy stands in stark contrast to the government's efforts to enhance export growth, which is crucial for stabilising and strengthening our currency," they said.
"Instead of facilitating growth, it places an additional burden on our farmers and exporters, potentially leading to reduced export volumes and lower foreign exchange earnings," they added.
The timing of the levy imposition has sparked particular concern, as it comes at a critical juncture for the cereal export sector.
While there was a modest recovery in the sector in 2023, cereal exports from Kenya have generally been on a downward trend over the past four years.
Introducing an export levy now risks stifling the recovery and impeding efforts to regain lost ground.
The KNCCI and CGA emphasised the need for immediate clarification regarding the recently introduced import levy.
They stress the importance of understanding whether these levies also apply to imports from international markets.
"We seek immediate clarification on the recently introduced import levy, It is imperative to understand whether these levies apply to imports from member countries of the East African Community (EAC) and the Common Market for Eastem and Southern Africa (COMESA)," the said.
NCCI said such levies could potentially disrupt regional trade agreements.
In light of these concerns, the KNCCI and CGA haved urged the government to reconsider the imposition of the export levy and engage in constructive dialogue with stakeholders in the agricultural sector.
They have called on the government to explore alternative measures that can enhance Kenya's export capabilities without imposing undue financial burdens on farmers and exporters.
"It is crucial to explore alternative measures that can enhance our export capabilities without imposing undue burden on our farmers and exporters."
KNCCI and CGA emphasised the importance of collaborative efforts and open dialogue in achieving solutions that align with national objectives and promote the welfare of farmers and the broader economy.